The announcement by the Reserve Bank that it was increasing the repo interest rate by .5% coming on top of proposed 8% increases in electricity rates is going to have a devastating impact on consumers. There is also a strong likelihood that South Africa’s staple food – maize meal – may increase by as much as 50% which according to experts is going to mean that many South Africans are going to experience hunger. The depreciation of the Rand which hit all times lows recently is going to increase the price of all imported goods including the five million tons of maize which will have to be imported and then distributed countrywide – some by rail but because of limited bulk rail capacity will probably have to be transported by road. Neil Roets, CEO of one of the largest debt management companies in South Africa, Debt Rescue, said the immediate future looks dismal for all consumers but especially for consumers with heavy debt loads. The ratings agencies including Fitch and Standard and Poor’s have all warned that South Africa’s bonds could be reduced to junk status if the economy was not better managed. Should this happen it would lead to an inevitable interest rate increase which would have a severe impact on deeply indebted consumers,” Roets said. Further repo rate increases will almost immediately translate in price increases for all commodities including food. “Although some maize producing areas had some rain it was very much a case of too little too late. The planting season is long over and the deficit that will result from this failed crop is going to affect the prices of all foods because maize is used as feed for the poultry and beef industry, Roets said. Roets said South Africans were the biggest borrowers in the world, according to a recent World Bank survey, and 10.26 million people have accounts that are three months in arrears according to the National Credit Regulator (NCR) he says. According the latest statistics released by the National Credit Regulator just less than 50% of all credit-active consumers are over-indebted, as they are in arrears by 3 months or more on at least one of their accounts. Roets said it was imperative to draft a budget (taking into account your income, deductions, expenses and monthly debt repayments) and stick to it. “It is better to save and buy cash and vitally important to live within your means,” Roets said. Loans should not be used for day-to-day living. They should only be utilised for buying expensive assets like properties and vehicles. He said it was vital to make financial provision for unforeseen circumstances, for example car repairs or a health crisis that might not be covered by medical aid. “Distinguish between what you need and what you want – do not try and keep up with the Joneses.” “As soon as you find yourself in a situation where your debt is overwhelming, seek help as soon as possible by contacting a debt counsellor. “Your debt counsellor renegotiates your debt repayments with your credit providers, ensuring you are protected from any new legal action. “The majority of the credit providers have accepted that debt counselling is one of the best and most cost effective collection methods.” Roets said.